Venezuela Inflation Q3 2016

Venezuela: Inflation soars in Q3

October 7, 2016

Given the dearth of official data for inflation, different indicators from official and non-official sources are used as proxies to measure the evolution of price levels in the South American country. According to figures from the Venezuelan Center of Documentation and Analysis for Workers (Centro de Documentación y Análisis para los Trabajadores, CENDA), the basic basket of food, goods and services was 13.6% more expensive in August compared to July and 552% higher than in the same month in 2015. The basic basket of food, goods and services takes into consideration prices of a different set of products than the consumer price index; particularly, the basic basket tracks prices of selected products to cover basic food needs, personal hygiene, living expenses, healthcare, education, clothing and footwear.

FocusEconomics Consensus Forecast panelists estimate that inflation jumped from 368.2% at the end of Q2 to 454.5% at the end of Q3. The latest available data show that the money supply increased by 104.6% in August, marginally up from July’s 99.4% increase. The money supply is expected to keep increasing at an alarmingly fast rate following new reports that show that oil output is declining.

Inflation is seen ending 2016 at 559.7%. For 2017, the panel expects inflation of 542.1%.

Venezuela Economic News

On 20 August, a series of far-reaching economic reforms came into effect as President Nicolás Maduro once again strived to tackle spiraling inflation, stabilize the freefalling currency and overcome the deep economic crisis gripping the country.

At the twentieth Central Bank Dicom auction held on 28 June, the bolivar sold at 134,262.5 VEF per EUR (approximately 115,000 VEF per USD), weakening 20.1% from the 111,734.4 VEF per EUR (approximately 96,000 VEF per USD) rate in the previous auction held on 25 June.

At the seventeenth Central Bank Dicom auction held on 8 June, the bolivar sold at 94,112 VEF per EUR (80,000 VEF per USD), weakening 0.8% from the 93,392 VEF per EUR (80,000 VEF per USD) rate in the previous auction held on 1 June.

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